Colombia's strong growth has meant burgeoning opportunity
for real estate investment, José Vélez, CEO of
Grupo Argos, told LatinFinance. But there is still
room for changes that will allow for a more mature property
sector, he says, and the country should look to other LatAm
markets, like Brazil and Mexico, which offer useful models.
"Real estate is a tremendous opportunity," Vélez
said. "Colombia is underdeveloped in terms of how to manage the
real estate business."
Looking at the US and Mexico, he identifies the need for a
REIT or Fibra real estate type of fund structure. The
legislation in Colombia does not exist for these structures in
the same way as in other countries, though there are funds such
as Patrimonio Estrategias Inmobiliarias.
"We need to develop something like the REITs in Colombia,"
Vélez said. "It is a very interesting vehicle for
investment. It is an important structure and part of the
development of the real estate markets."
Argos is not immediately interested in planning a fund
itself, though it might be a useful option down the road.
Vélez said it is something that real estate companies
should work together on to lobby the government.
Following the corporate reorganization that separated the
Cementos Argos subsidiary, Grupo Argos is now free to focus on
real estate. It is active in malls, shopping centers, office
buildings, distribution centers and industrial plants.
Malls offer a particularly attractive opportunity, mostly
owed to a conspicuous lack of specialist managers in the mold
of Brazil's BR Malls. Vélez said Argos plans move into
mall management itself. It would contract out the malls'
construction - an area Argos is not interested given
competitors might be clients of Cementos.
Large-scale land development - laying out a master
plans for multi-use development, including roads, water and
power - is another area the company would like to target.
Again, Brazil offers an example here. Vélez offers
Gafisa as a model of a successful master planning brand.
For now, the real estate growth is fuelled by the $400
million raised in last year's preferred share equity sale, but
"this is growing fast and we will need to raise more capital",
Argos' Compas port operation business, a partnership with
Spain's Ership and the Echavarria Obregón family, will
require Argos to invest $200 million in capex in the next few
years. Initially, Vélez said Argos might use bank
"We can raise debt in the Colombian market, and raise equity
from the current shareholders. To grow maybe we will go to the
international markets in the future," he said. LF